The XEROX/HP saga playing out is proving that many can't see past what's in front of them and have limited imagination to assist them in discovering how things could be, based on how things should be. It's been a few months since Xerox took the bold action and beat HP to the table in a merger discussion.
BUT XEROX IS TOO SMALL TO BUY- THE GREAT BIG HP!! Say those looking with no imagination.
Yes, HP should have approached Xerox. HP having three times the market cap acquiring the smaller Xerox, obviously makes more financial business sense. However, in today's business environment being bold and decisive are better attributes than being big slow and arrogant to yesterday's circumstances.
What would Bill Hewlett and David Packard do today? I would say they would have called Carl Icahn and brought the two companies together they surely wouldn't be sitting in silence. Bill and Dave were creators of the future, not managers of the past. Today Xerox seems much more focused on delivering the future to the present and much bolder towards accomplishing that.
"A company becomes obsolete when it focuses on delivering the past to the future instead of delivering the future to the present."
HP seems to be sitting quietly by hoping Xerox just goes away. I conclude that HP's silence is loudly defining their absolute lack of boldness. It appears as though the newly appointed HP leaders are more concerned with maintaining power as they create visions from memories. Where the Xerox leadership team is decisively expressing a desire to recreate tomorrow for an entire industry, a tomorrow where Xerox imagines two iconic companies coming together to reinvent the industry they both gave birth to. Xerox giving birth to xerographic print technology and HP giving birth to digital printer technology.
Of course, Shareholder value is essential, so, is a company's relevance, and most agree that relevance is what provides continuous shareholder value.
Some suggest this is all about Carl Icahn making money. Well, Carl does know how to make money. However, Carl is also a leader who is watching an industry that is quickly resembling another industry. Remember KODAK? I see Carl's interest as an interest not only about shareholder value but an interest in preventing two iconic organizations Xerox and HP from becoming victims of maintaining yesterday; something the world watched kill Kodak.
Remember, it was Carl who re-aligned the Xerox board, re-evaluated the leadership, and the direction of Xerox during the attempted sale to Fuji by the evicted past administration. I see Carl Icahn as one who is concerned for an industry and is showing his leadership in reinventing it, starting with the appointment of John Visentin as the new Xerox president, which has proven to have been the right decision.
Where's the outspoken HP Board Member? Arguing for Status Quo. Is HP's Board merely a rubber stamp for HP's brand-new executive team? We sure don't see any Boldness from their Board or Executive team.
HP's leadership is missing the value of this merger or, worse, are more concerned about protecting their positions than protecting their shareholders. The industry of print equipment and its services is unbalanced between supply and demand. Anytime supply exceeds demand adjustments are mandatory to bring back balance. Over the last couple of years, we continue witnessing declines in both document printing and copying, thereby declines in sales and manufacturing. The industry must consolidate, and HP's arrogance to ignore Xerox's offer is not in the best interest of the HP shareholders.
HP is gambling that they don't need what Xerox brings them. However, they are also risking that an alternative acquisition by Xerox won't affect them. These two gambles are foolish bets in a declining marketplace. Especially as the two are current market leaders in their core competences.
Xerox's ability to sell and then service what it sells through a push economy process utilizing a world-class direct and dealer partner distribution footprint. HP's dominance in desktop printing and compute equipment mostly sold through pull economy processes. Both Xerox and HP are globally recognized brands and they should capitalize on this.
HP is jeopardizing its dominance in a declining market, and if XEROX decides or is forced to move in a different direction, HP could face disastrous results. Use your imagination and think about the possibilities. The industry is consolidating, and all manufacturers are facing challenges with their financial outcomes, both revenues and profits are slipping downwards with increasing speed.
In closing: I would suggest that all those looking for the reasons this merger won't work instead imagine the possibilities of how this merger will work and regarding the noise around Xerox having too much debt as the buyer. Think about a strategy where Xerox sells an equity position in the newly formed Xerox/HP company. There're a few manufacturers I can think of who would be ecstatic to join in the re-invention of an industry. Think about Canon or Fuji. Yes, we all remember Fuji and Xerox once had an equity relationship.
In times of declining markets in need of diversification and consolidation, strange bedfellows emerge. As I have mentioned, it takes boldness and decisiveness to deliver the future to the present.
"Status quo is the killer of all that will be invented." HP don't get stuck in Status quo."
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